CS Divesh Goyal

Services which can be rendered by the Auditors:

As per Provisions of Section- 144 of Companies Act, 2013, A Statutory Auditor of company can’t provide the following below mentioned services to followings:

  • To the Company
  • Its Holding Company
  • Its Subsidiary Company

Services which a Statutory Auditor can’t provide directly or indirectly to above mentioned Companies:

(a) Accounting and book keeping services;

(b) Internal audit;

(c) Design and implementation of any financial information system;

(d) Actuarial services;

(e) Investment advisory services;

(f) Investment banking services;

(g) Rendering of outsourced financial services;

(h) **MANAGEMENT SERVICES; AND (Its Dangerous, Must be taken care)

(i) Any other kind of services as may be prescribed. Etc.

Meaning of Following:

MANAGEMENT SERVICES: Management services means services rendered on behalf of Management, which management itself is oblige to do. E.g.

♣ Preparation and filling of:

  • Income Tax Return
  • ROC Return
  • Service Tax Return
  • VAT Return
  • TDS Return
  • Excise Return

♣ Maintenance of Books and Accounts

♣ Preparation of Balance Sheet etc.

Above mentioned services can’t be rendered either directly or indirectly:

DIRECTLY OR INDIRECTLY:

A. In case of auditor being an individual :

  • either himself or
  • through his relative or
  • any other person connected or associated with such individual or through any other entity, whatsoever, in which such individual has significant influence or control, or
  • whose name or trade mark or brand is used by such individual;

**RELATIVE MEANS:

Relatives include:

relativesRelatives don’t include: However following are not covered under relative list:

no relativesB. In case of auditor being a firm,

  • either itself or
  • through any of its partners or
  • through its parent, subsidiary or associate entity or
  • through any other entity, whatsoever, in which the firm or any partner of the firm has significant influence or control, or
  • whose name or trade mark or brand is used by the firm or any of its partners

MOST IMPORTANT:

An Statutory auditor of the company can provide the services except mentioned above “ONLY AFTER GETTING APPROVAL OF BORD OF DIRECOTRS OR AUDIT COMMITTEE”

Therefore, If Statutory Auditor want to provide service other than services not permissible u/s 144 then he need the Approval of Board of Director by passing of Resolution by board of Director in favor of auditor for providing such services.

AUDIT OF BRANCH OFFICE:

Where a company has branch office, the account of that office shall be audited by either by the statutory auditor of company or by any other person qualified for appointment as auditor of the company.

RESPONSIBILITY OF STATUTORY AUDITOR UNDER COMPANIES ACT, 2013:

A. Signing of Auditor Report: (As per Section – 145)

The person appointed as an auditor of the company shall

  • Sign the auditor‘s report; or
  • Sign other document; or
  • Certify any other document of the company

Note:

a) Where a firm including a limited liability partnership is appointed as an auditor of a company, only the partners who are chartered accountants shall be authorized to act and sign on behalf of the firm.

b) The qualifications, observations or comments on financial transactions or the matters, which have any adverse effect on the functioning of the company mentioned in the auditor‘s report shall be read before the company in general meeting and Open for inspection by any member of the company.

B. Attendance in General Meeting: (As per Section – 146 of Companies Act, 2013)

This Section will be applicable on all the General Meeting including Annual General Meeting.

As per Language of Section:

  • All the Notice and other Communications relating to General Meeting shall be forwarded to the Auditor of the Company.
  • The Auditor will attend all the General Meeting of the Company.

Exempted Only

When auditor will send letter for exemption from attendance in General Meeting to Company and Company will grant leave to him for not attending the General Meeting.

If auditor is not exempted by the Board then Auditor himself or his authorized representative (who shall also be qualified to be an auditor) will attend the general meeting and will heard at such meeting on any part of the business which concerns him as auditor.

(Author – CS Divesh Goyal, ACS is a Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com)

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8 responses to “Services by Auditor Under Companies Act, 2013”

  1. Sanjay Kothari says:

    whether statutory auditor of Holding company can provide the tax advice to step down subsidiary for transaction of sale of business?

  2. harsha says:

    Thank yo sir for your valuable information. i had a query regarding to managerial services whether a statutory auditor can certify the ROC forms is i covers under term managerial services,because management duty was to prepare and file the forms as a professional statutory auditor was signing the form.

    Kindly clarify me if i am wrong.

  3. CA V Rama Krishna Rao says:

    very nice articles – quite informative.

  4. Mahavir Kapshe says:

    Very good article.

    MCA may issue a clarification in the lines of phrase “Non Audit Services” used in proviso to Section 144 of the Companies Act 2013. It is indicating “Auditor” is prohibited from providing any non attest services to the “Auditee”.

    Probably reasoning might be,

    We are undertaking Audit by virtue of provisions of legislation passed by Government which makes us representative of Government and at the same time we are representing the same report to the Government on behalf of “Assessee”.

    Clarification on this issue is very essential and at the earliest.

  5. Bhavani Shankar says:

    Can a Statutory Audit be the VAT Auditor?

  6. Aditya says:

    Please provide the source for meaning of managerial service is provided.

  7. AK Taher says:

    From where did you derive the meaning of Management Services?

  8. B.Chackrapani Warrier says:

    Read the article. Thanks.

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